Minimum wage laws make the problem worse
June 12, 2008 · Updated 4:48 PM
On Jan. 1, Washingtons minimum wage jumped to $7.35 per hour the highest rate in the nation further cementing the states status as a poor place to do business, and not coincidently, an increasingly inhospitable place to live, as well. Especially for the poor.
Proponents of minimum wage increases are fond of pointing out that workers at the bottom end of the economic scale have a difficult time supporting themselves, let alone a family. While thats undoubtedly true, it also conveniently overlooks the fact that only an infinitessimal percentage of workers earning minimum wage are the sole support of their families.
Most, in fact, arent even supporting themselves. The majority are teenagers, working part-time after school for spending money. Or theyre unskilled youngsters just starting out in the workplace while still living with their parents.
Or theyre spouses, supplementing the income of the familys primary breadwinner. Or theyre seniors, supplementing their Social Security check or pension.
In any case, almost no one currently earning the minimum wage will earn it for very long. A minimum wage job represents a stepping stone to something better, for most workers.
But that opportunity only exists where there is a job, and when an employer is forced to eliminate an existing position or delay hiring a new one because he cant afford the higher wage, how exactly is the unemployed worker helped?
Minimum wage boosters imply that companies can simply reduce their huge profits or cut the salaries of managers to make up the difference, but anyone whos ever run a business understands just how unrealistic an idea that is. Most businesses operate on the narrowest possible profit margin in order to stay in business. If they didnt, their competitors could underprice them and drive them out of business.
Any increase in the cost of labor is automatically passed on to the consumer, who in turn raises the cost of what he or she produces in order to make up the difference.
Thats called inflation, which hurts everyone especially the working poor, who minimum wage laws are supposed to help.
Minimum wage laws, despite the claims of the self-serving politicians who promote them and the wishes of the poor and ill-informed who support them, invariably do more harm than good. Ask yourself this: If it were possible to eliminate poverty simply by passing a law, why couldnt we simply raise the minimum wage to $40,000 and be done with it?